Whether
you are seeking to source a new project or drive down costs in an existing
category, the Request for Proposal (RFP) is often the go-to way for engaging suppliers
and identifying a solution to your organizational goal. It may seem that suppliers should be jumping
at the chance to complete your request, especially if you are a company with
few budgetary restrictions and high overall spend, however this may no longer
be the case. Taking up both significant
time and resources, suppliers today are more hesitant to participate in a
lengthy RFP process, especially if the chances of being awarded the new
business look slim. If you want to
maximize your response quality and increase competition, take into
consideration what the true cost of an RFP is to your suppliers (and your
organization), and follow these guidelines for each phase of the process to
drive down cost and increase value.

Phase 1:
Supplier Selection

Do your research.
Understand your needs and learn as much about your potential supply base as
possible. Use information discovered at
this stage to structure your expectations for the initiative and select
suppliers that appear to align with those expectations.

Share insight on
organizational culture.
As you begin to contact potential suppliers take the time to understand their
organizational culture and align it with your own. Give them confidence that there is common
ground to reduce the risk of unresponsiveness in later stages.

Be Upfront about Fit.Deciding on fit should be a collaborative effort. Do not be vague about the nature of the initiative,
disclose as much information as possible, and discuss whether or not it would
make sense to include the supplier.
Falsely engaging a supplier for the entire process when they do not have
the capabilities will not benefit either party, and will waste valuable
resources.

Phase 2:
Preparing the Questionnaire

Be as transparent as
possible.
Give direct timelines for release dates, due dates, and question
responses. Giving ample notice of when
to expect deliverables prevents wasted time requesting updates on both ends. If
you are sourcing a pilot initiative, be candid about budgetary constraints and
price point expectations. If no budget
is established, let the supplier know ahead of time that you are testing
feasibility. If a supplier is not confident
that their proposal will fall within an acceptable price range, the opportunity
cost to complete a thorough proposal becomes greater. If you are sourcing an existing initiative,
be as specific possible about areas that are lacking and your goals for improvement.

Ask for
differentiators, not descriptions.

At this stage in the process you should already be confident in each
participating supplier’s capabilities.
Allow them to tell you why they are a top player, not a long-winded
description of how they function.

Present your end
goal, not how you think you should get there.
Allowing a supplier to construct a plan based on their own capabilities takes
the time and resources out of merging their offering with your initial idea,
and allows opportunity for greater efficiency in the solution.

Keep it closed-ended
where possible.
If you know the response you are looking for, utilize drop-down menus and
character limits for responses. If a
supplier has a large space for a response, they may feel pressured to compete
by filling the space. Save their time
and your time by imposing limitations.
Allow a section for final comments at the end. Instead of, “What
certifications do you possess?” ask, “Are you certified in X, Y, and Z?”

Be mindful of your
respondents.
Consider the types of questions you are asking and the role required to answer
each. Differentiate questionnaire
sections based on the person with the knowledge to respond to allow your
supplier to allocate resources responsibly.
An engineer cannot answer financial questions, and the sales
representative should not have to filter through technical questions to find
ones relevant to account details. If you are expecting certain suppliers to bid
on partial business, have relevant information organized by location, product
category, or any other differentiating factor.

Step 3:
Supplementing the RFP

Present supplemental
information in a simple, organized fashion.
Do not force suppliers to open large quantities of individual files to locate
specifications that could be presented in one simple spreadsheet. Often specification information can only be
reviewed by highly skilled engineers and executives. Examining a large number
of documents is time consuming and expensive for the company.

Present a reasonable
timeline.The time allotted for an RFP response is critical to the success of the
project. If a timeline is too
aggressive, suppliers may become weary that you are simply searching for
pricing and have no real interest in transitioning business. If a timeline is too relaxed, suppliers may
lose interest in the process and communication may suffer as a result. The key is to find a common ground which
gives suppliers enough time to present a successful proposal, without losing
engagement. An open dialogue during the
early stages of the RFP, along with evaluation of past experience, can be the
best way to determine a timeline.

Use supplier
questions as a resource.
Collect supplier questions and distribute responses anonymously to all
participating suppliers to ensure an even playing field and prevent time loss
answering repetitive questions.

Be accessible for
communication.
An RFP is a stressful process for both your company and the involved suppliers.
Keeping communication channels as open as possible will reduce the risk of
unexpected road blocks and suppliers dropping out of the running mid-way
through, creating a loss on both sides.

Issue constructive
rejection notices.
If a supplier does not win the business, they are more likely to be open to the
RFP process in the future if they received feedback to enhance their business
processes. Have an open conversation
rather than issuing a standardized notice in writing.

By being upfront with suppliers
about your goals and available resources, you provide them with the incentive
and motivation to present a robust proposal.
It is vital that the platform for a long term, mutually beneficial
relationship is established at the beginning.
By taking into consideration the time and resources that are used to
deliver lengthy responses and taking action to reduce these costs, you are
presenting your organization as transparent, organized, and invested in every
step of your procurement process.

For over twenty years, Source One Management
Services has been supporting Fortune 1000 realize billions in saving through
our Strategic Sourcing Process. From developing the RFP to conducting
best-in-class negotiations, our experts can help you identify and onboard the best-fit
supplier that meets your organization’s needs.

Strategic Sourceror

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About Source One

Source One is a leading procurement services provider. Since 1992, Source One has been providing companies in all industries with sourcing services including BPO, Benchmarking, Spend Analysis, Category Support, and RFX Management.